Tuesday, May 15, 2012

Meanwhile Shareholders Call For SEC Investigation

Yesterday was a bad day for Chevron once again. Its favorite judge, Lewis Kaplan, basically said the charges the oil giant has brought against the Ecuadorians and their representatives are not likely to stand up in court. And, Chevron shareholders asked the SEC to investigate the company's lack of disclosure concerning the risks it faces from the $18 billion judgment.

See here about the SEC investigation. Below is the press statement released by the Amazon Defense Coalition about Kaplan's ruling:

Chevron suffered two new legal setbacks today when a U.S. federal judge who usually favors the company rejected its attempt to attach the assets of the Ecuadorians and their counsel who won an $18 billion judgment for environmental damage and separately tossed out two fraud-related claims against an American lawyer, according to published court decisions.

Judge Lewis A. Kaplan -- who for the last two years has almost uniformly favored Chevron in the hotly contested case -- also cast doubt on the viability of Chevron's two remaining claims under the federal civil racketeering statute, dealing another blow to the oil giant's campaign to evade paying the landmark judgment that was issued in February of 2011.

The decisions are the latest in a series of legal setbacks this year against Chevron over the $18 billion judgment. They include the unanimous reversal of Kaplan in a U.S. federal appeals court of a worldwide injunction against enforcement of the Ecuadorian judgment; an Ecuadorian appellate court's confirmation of a trial court decision that Chevron dumped billions of gallons of toxic waste into Ecuador's Amazon; and now, a refusal to attach the assets of the Ecuadorians and a narrowing of the fraud case.

Kaplan also cast doubt on the remaining RICO claims, saying they "raised a question concerning whether and to what extent Chevron may recover ... for injuries sustained" outside of the United States.

"Suffice it to say for present purposes that Chevron on the present record has not established that it is likely to prevail on its claim" that funds spent to defend the case in Ecuador would be recoverable in the fraud case, essentially eviscerating the company's ability to recover damages, according to the court.

In making his rulings on a pre-trial motion to dismiss the fraud case, Kaplan was required by law to assume that all facts alleged by Chevron were true even though they are contested by the rainforest communities and their counsel, who allege that Chevron committed criminal acts and fraud to cover up its extensive contamination in the South American nation.

Yet even with the assumption its disputed allegations were true, Chevron still found two of its claims tossed out and was soundly rebuked by Kaplan on the attachment issue, said Karen Hinton, the U.S. spokesperson for the Ecuadorians. At this point, Chevron is the only party in the litigation facing attachment of its assets given that the Ecuador judgment is enforceable around the world, Hinton added.

"These rulings by Judge Kaplan are yet another devastating setback for Chevron's prospects to avoid paying the Ecuador judgment," said Hinton. "The fact Chevron is now running into resistance from its most favored U.S. federal judge shows just how dim the company's legal outlook has become on the Ecuador case."

"Chevron has suffered a virtually uninterrupted string of defeats in courts in Ecuador and the United States over the past year and we expect this trend to continue in the coming months in courts around the world," Hinton added.

Hinton also released this statement to reporters:

"Judge Kaplan's decisions to deny Chevron attachment and to throw out several fraud claims represent yet another setback for the oil company and its shareholders. In the last year, Chevron has seen courts in Ecuador and the U.S. vacate its worldwide injunction against enforcement of the Ecuador judgment; affirm the Ecuador trial court judgment; reject an international investor arbitration attempt to block the Ecuador trial; deny a motion to attach the assets of the Ecuadorian rainforest communities; and throw out a good portion of its fraud case against the Ecuadorians and their American lawyers. Given that it still refuses to pay the Ecuador judgment, it is Chevron that now faces attachment actions against billions of dollars of company assets in courts around the world for intentionally polluting the Ecuadorian rainforest.

"That said, Chevron's RICO charges always have been baseless and are nothing more than a public relations stunt to hide the company's environmental abuses and fraud in Ecuador that destroyed the rainforest and killed numerous people with cancer and other oil-related diseases. If the RICO case proceeds to trial, which is highly doubtful in light of today's ruling, the rainforest communities and their counsel plan to file counterclaims against Chevron and certain of its executives for fraud and are confident that the case will result in a finding of additional liability against individuals in Chevron who are responsible for the environmental disaster and cover-up."